Rover puts agencies on notice amid losses

MG Rover is set to trim its agency roster and take more work in-house in the wake of losses and falling sales.

The carmaker has put all of its agencies, including its lead shop M&C Saatchi, on notice while it considers how to use its £30 million annual budget.

Industry sources say Rover has already decided to take local advertising and PR in-house in an effort to cut costs.

Besides M&C Saatchi, which has handled Rover's above-the-line creative account since September 1999, the company also works with LIDA, Cogent and Ketchum, which runs its PR account.

"Inevitably there will be pressure on agency fees, but it's not just a case of Rover wanting more for less," an insider said. "Rover is trying to prioritise its needs and work out which services it should be paying a premium for."

Supplier shops were told last month by John Sanders, Rover's sales and marketing director, that they were on notice while the company spent the next two months re-evaluating its requirements.

"Some agencies will be retained, others will have their contracts changed. Others will be dropped," a source said.

Since its acquisition from BMW by Phoenix Venture Holdings in May 2000, MG Rover has steadily reduced its losses. However, Rover sales have dropped by more than 16,000 to 160,400 in 2002. Last weekend, the company began a TV push pledging to match any deal offered by its rivals.